Board president may be making up her own rules

Mark Pearlstein, SPECIAL TO THE TRIBUNECHICAGO TRIBUNE

Q. I live in a small condominium building. We keep our assessments low by having everyone pitch in and do work around the building. We hire an engineer, who lives off-site, to perform maintenance, and we also hire contractors for major repairs. There is no rule indicating that owners have to pitch in, but we typically expect each owner to put in 5 to 10 hours of work per month.

Now that one unit is on the market and under contract, the president wants to nail down this labor commitment. She wants to enforce it by fining each owner $25 per hour for months not worked. She also wants to add a pet weight restriction. All this is to be done before the new owner moves in.

Can she obligate the owners to commit to labor services for the building? If so, can she add a fine for owners who do not work their required hours? Is it a good idea to start changing the rules after a contract is signed and before the unit closes?

The president also wants to get paid for the time and effort it takes to attend to closing documents. Is she allowed to get paid for this, or should the money go to the association fund?

A. Under Illinois law, condominium owners are obligated to pay assessments for expenses approved by the board. The law does not require owners to perform services in lieu of assessments.

The proper way to change association regulations is either through an amendment to the declaration, approved by an owner vote, or revisions to the rules that have been adopted by the board of directors. Rule changes must be sent to the owners 10 to 30 days in advance of a meeting to discuss the rules. The board of directors formally adopts the rule change. There are no shortcuts to either process. In a small building, the owners should vote to amend the declaration to adopt a pet weight restriction.

Directors and officers are not generally compensated for their services unless the by-laws specifically provide for such compensation. Condominium fees for expenses relating to a sale or lease are not uncommon, but the charge must be reasonable and the funds go to the association and not an individual.

Q. One unit in my association was foreclosed over a year ago, but the previous owner still lives in the unit and, of course, is not paying assessments. I understand that the bank owns this unit now and is responsible for assessments. The bank has refused to pay assessments until it sells the property. Agents are ready to market the property but cannot do so until the unit is vacant. The unit will not be vacant until the bank formally evicts the prior owner.

This is a frustrating situation because our association needs to collect all assessments.

Can the bank be required to pay assessments now, or can we get around the bank by insisting that the sheriff evict the occupant?

A. Under the Condominium Act, the bank must pay assessments on the first day of the month after a foreclosure sale. The board should act aggressively by taking action to collect assessments now owed by the bank as the unit owner. The board must issue a demand for possession to the bank followed by an eviction lawsuit. The only means for the association to evict the occupant is by a separate lawsuit. If the association has to proceed with an eviction lawsuit, you can expect the process to take a minimum of four months. The downside is that the association will have to advance legal fees for the collection action but will eventually recover its fees.

One hopes it will not be necessary to proceed against a lending institution. The bank cannot avoid its legal obligation to pay assessments simply by waiting until it gets around to listing the unit for sale. It is unfortunate that the lending institution does not follow its legal obligation. The bank's inaction will not get a bad loan off its books.

Q. I live in a community with various size units. My board tells me that Illinois law requires that units be assessed on the basis of a percentage of ownership, meaning that the larger units pay more in association fees. Is this correct?

As a larger unit owner I do not get any more privileges than a small unit owner.

A. You have a larger vote to go along with your higher assessments.

If your association is a condominium, both assessments and voting rights are determined by percentage of ownership. The percentage is based upon the original listing prices for the units. The percentage concept is followed by condominiums throughout most of the country.

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Mark Pearlstein is a Chicago lawyer who specializes in condo law and is chairman of the legislative committee of the Illinois chapter of the Community Associations Institute. Send questions to house&homes@tribune.com.